Good day and welcome to the Standard Chartered First Quarter 2023 Results presentation. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question by phone, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press the star one again. For operator assistance throughout the call, please press star zero. Alternatively, if you wish to ask a question via the webcast, please use the question box available on your webcast page to submit your questions. I would also like to advise all participants that this call is being recorded. Thank you. I'd now like to welcome Bill Winters, Chief Executive, to begin the conference. Bill, over to you.
Morning, good afternoon. Thanks for joining our first quarter results call today. I'll make some opening remarks, Andy will talk to the numbers before we do the usual Q&A. Our first quarter results are strong despite the challenging external environment. Income was up 13% to $4.4 billion, underlying profit before tax improved 25% to $1.7 billion. This is our highest first quarter profit since 2014. Our return on tangible equity was up 170 basis points to 11.9%. We've also made really good, strong progress on each of our strategic initiatives, growing our network business, our affluent client segment and sustainable finance income, while accelerating the growth of our mass market retail business.
This has led to growth in non-interest rate sensitive financial markets and wealth businesses from the dip we experienced through the middle of last year, allowing us to fully capitalize on our interest rate exposures while positioning us for strong growth for the remainder of the year and beyond. We had a particularly strong quarter in our financial markets business, approximately matching our record performance from last year's first quarter. We've capitalized on investments we've been making to broaden our capabilities and serve clients with the broadest range of risk management and financing options across our markets. As Andy will describe in more detail, we think this bodes well for ongoing growth in that business line.
During March, I was in Bahrain, Singapore, China and Hong Kong. A key takeaway from this trip is that activity in Asia and the Middle East remains robust despite the recent banking sector concerns in the US and Europe. The recent reopening of China is pushing activity levels higher. This is continuing to show in our numbers, with China offshore income up 67% so far this year. The leading indicators of China reopening, such as new client acquisition, support our optimism for performance over the rest of the year. We expect the China recovery to continue, which should help offset the impact of Western slowdown on Asian economies should that occur. We've not seen any material impact on the Asian financial system from events in the West, nor do we expect to do so.
The recent banking sector turmoil feels different to the global financial crisis. Post GFC regulation means banks are carrying much higher capital and liquidity levels. The bank failures we saw suggest this was a crisis of confidence in a few institutions, not a broader solvency issue. Our regulators acted swiftly and decisively in providing liquidity support where needed, and this appears to have prevented broader contagion. Going forward, we believe central bank objectives will be best met through more consistent regulation across banks and between banks and non-banks, as well as by providing further clarity to the market on the availability of central bank funding to address liquidity challenges in otherwise solvent banks. Now, we see no indication that our business model is challenged, and nor are there any gaps in the way that we're regulated or in our access to central bank funding should we ever need it.
Our balance sheet and liquidity profile is very robust. We've provided more disclosure on those topics, which Andy will cover in some detail. We've navigated the market turbulence well, but we're not complacent, and we're watching closely for any signs of further pressure that may emerge. Following the strong first quarter performance, positive momentum and encouraging leading indicators across our businesses and markets, we're firming up our guidance on income growth to be around 10% for this year, the top end of our 8%-10% range previously mentioned. We think we'll accomplish this as we expect higher other income due to increased confidence in the outlook, despite lowering the NIM guidance by 5 basis points to around 170 basis points in 2023.
This revised NIM outlook comes in part as we have deliberately chosen to run with strong liquidity positions through these challenging times. To summarize, we're delivering on our strategy and commitments. We're optimistic on the outlook for our footprint markets. We're mindful of the external macro headwinds and recent challenges in the banking sector, but our balance sheet is robust and we remain confident in the ability of our franchise to deliver our ROTE targets. With that, I will hand over to Andy, and we will both be back at the end for some Q&A.
Thank you, Bill. Good morning and good afternoon to everybody joining today. Before going through the numbers, I wanted to reinforce Bill's comments. Having spent time recently with the board and with our management team in Asia, whilst there remain broader challenges in the global economy, our footprint markets feel to be in a different place to the West. We continue to expect higher levels of GDP growth in Asia versus the West in both 2023 and 2024. Footprint activity levels are picking up, in part due to the recent recovery in China. We also expect business sentiment and activity in our footprint to be less impacted by the fallout from recent banking sector challenges seen in the West.
Before I get into the numbers, can I remind you that we recently published the representation of our financials, reflecting the move of the Africa and Middle East exit markets, the aviation finance business and DVA movement into restructuring and other items. Comparisons in my remarks are, unless otherwise stated, to the represented financials and on a constant currency basis. To the numbers on slide 6. As Bill has already mentioned, income of $4.4 billion was up 13% ahead of our 8%-10% guidance range, representing the group's best first quarter income performance since 2015. On a statutory basis, net interest income was up 18% year-on-year to $2 billion as the liability led businesses of TB Cash and retail deposits benefited from rising rates. Other income was up 9% to $2.4 billion.
Expenses of $2.7 billion were up 10%, reflecting the impact of inflation and staff cost increases supporting business initiatives. Income-to-cost jaws were 3% positive in the first quarter. We remain confident in our ability to deliver 3% positive jaws in 2023. Loan impairments of $26 million were significantly lower year-on-year. In the associates line, the profit from Bohai was down, this was already anticipated in the impairment charge we took in relation to Bohai at the end of 2022. Together, these movements generated an underlying profit before tax of $1.7 billion, up 25%, our best quarterly profit performance since 2014. We therefore delivered an underlying return on tangible equity of 11.9%. The balance sheet is strong, liquid and well diversified.
CET1 of 13.7% is towards the top end of the 13%-14% target range. After the full impact of the $1 billion buyback announced at the full year 2022 results. Our liquidity coverage ratio is up 14 percentage points in the quarter to 161%, the highest level we have reported. Looking at income in more detail on slide 7. As I mentioned earlier, total income grew at 13% in the quarter. In transaction banking, cash continued to benefit from higher rates, supported by pricing discipline and pass through rate management, with income almost tripling year-on-year. Trade, on the other hand, was down 3% impacted by lower global trade flows, challenging credit conditions in major markets and margin compression.
In retail, deposit income more than tripled year-on-year, supported by rising rates and well managed pass through rates. Mortgage income was down 52% as market dynamics, including the prime rate cap in Hong Kong, led to margin compression and lower volumes. CCPL income was up 2% on higher credit card balances and fee income. Negative income in treasury reflected the $298 million loss on our structural and short-term hedging positions in a higher rate environment, as well as higher external funding costs and lower realization opportunities, given higher market yields. Lending and portfolio management was broadly flat as higher fee income was partly offset by lower volumes and a higher cost of funds on undrawn commitments.
Lastly, through the country lens, we saw some strong performances with Hong Kong and Singapore, our two largest markets being particular standouts, with income growing 33% and 40% respectively. I'll talk more about the opportunities we see in financial markets and wealth management later. Looking at net interest income in more detail on slide 8. First quarter net interest income after adjusting out the trading book funding cost was $2.3 billion, up 36% year-on-year, as the average adjusted net interest margin increased 34 basis points to 163 basis points. Quarter-on-quarter, the net interest margin was up 5 basis points as a 14 basis point benefit from higher rates was offset by a 3 basis point impact from net hedging positions, 3 basis points from CASA-to-time deposit migration and 3 basis points from higher treasury balances.
The negative impact on net interest margin from our hedging positions was reduced by the roll off of 60% of our short-term hedges in the quarter, the remainder of which rolls off by February 2024, which will be a further benefit to NIM. The cost of funding the trading book in the first quarter increased to $352 million, primarily reflecting increased cost of funds. We now expect the trading book funding adjustment in 2023 to be around $1.7 billion. This increase has no impact on adjusted NII but enables us to continue to invest into our high returning financial markets business. We are broadly comfortable with the current implied adjusted NII consensus.
We have reduced our NIM outlook by 5 basis points to around 170 basis points in 2023, and then expanding in 2024 to around 175 basis points. This NIM change reflects both updated forecasts and our decision to deliberately operate with higher liquidity levels at this time. Looking at financial markets in more detail on slide 9. Financial markets made a good start finishing the quarter strongly on higher trading gains and widening spreads as volatility rose in March. FM income on a headline basis was lower by 5%. Adjusting for the one-off gains on mark to market liabilities of $94 million in the first quarter of 2022, the underlying performance was up 1% compared with a record quarter for FM last year.
The recent stress in the banking sector demonstrates that uncertainty and volatility have not gone away. This is expected to support FM flows and performance going forward, increasing our confidence in the overall outlook. This market uncertainty drove client flows and wider spreads. With strong double-digit year-on-year growth rates in rates and credit trading against a strong comparator period. Around 70% of FM income came from more stable flow income generated by client liquidity and exposure management, including the business flows into FM from transaction banking. Flow income, which is more sustainable relative to episodic income, was up 15% year-on-year, which will support FM's performance in 2023. Now focusing on wealth management on slide 10.
Income of $511 million was flat year-on-year against a strong prior year comparator and is recovering well from a slow second half of last year. Treasury products had a strong start offset by lower managed investment and wealth lending as equity markets remain challenging. Bank assurance was broadly flat against a strong prior period. The post-pandemic reopening in North Asia has laid the foundations for an ongoing recovery in wealth management over the coming quarters. In Hong Kong and China, we saw double-digit growth in bancassurance and treasury products, with overall wealth income up in both markets year-on-year. We are seeing strong traction in leading indicators such as client onboarding, with new to bank affluent clients up four-fold in Hong Kong and doubling in China relative to the first quarter of 2022.
Having onboarded new clients, we will focus on monetizing these relationships going forwards. We are well positioned as a top four wealth manager in Asia. The post-pandemic reopening in our markets is supported and the longer term structural drivers of Asia wealth remain compelling. This gives us confidence that our wealth management business will continue to grow going forward. Turning to expenses on slide 11. Costs were up 10%, resulting in 3% positive jaws in the quarter, in line with our full year guidance. The cost income ratio improved 2 percentage points to 61%. Inflation of 5% and higher staff costs in support of business initiatives, particularly in China, FM, and retail, were the main drivers of the cost line.
We continue to invest in the business with investment spend up $72 million and a further $27 million going into ventures supporting portfolio growth and Trust Bank in particular. Investment spend was broadly offset by $128 million of cost savings. To date, we have delivered $0.6 billion of our $1.3 billion cost efficiency program. We are committed to managing costs tightly to ensure that we meet our full year jaws guidance of 3% in both 2023 and 2024. We expect jaws to widen if income outperforms current guidance. Moving to credit on slide 12. Impairment of $26 million was down $172 million year-on-year, reflecting our disciplined and proactive approach to risk management in a challenging macro environment and volatile markets.
In retail, the $62 million charge was net of a Covid overlay release of $12 million. In the sovereign portfolio, there was a net release of $23 million. We continue to monitor sovereign risk closely in several markets and are taking assertive management actions to reduce our exposure should further defaults occur. Consequently, we think the impact of a Pakistan default on CET1 would not be material. On China commercial real estate, whilst we have seen favorable policy measures in support of sectoral liquidity, some risks remain until buyer confidence returns more fully and sales materially pick up. In terms of forward-looking indicators, high risk assets were broadly stable in the quarter. Early alerts were up $0.4 billion, reflecting new inflows relating to a select number of clients, while CG12 accounts and net Stage 3 together reduced by a similar amount.
Switching to the balance sheet, a topic of significant market interest in recent weeks. Firstly, on slide 13. Underlying customer loans were down 1% quarter-on-quarter, reflecting lower mortgage balances as market conditions meant writing new business was economically unattractive. Now to the topic of the moment, deposits. Our customer deposit base was stable throughout the quarter, with no unusual trends observed in recent weeks. In the first quarter, we saw $3 billion of retail inflows and $1 billion in financial markets, offset by $4 billion of business as usual month-end outflows in transaction banking, the majority of which returned shortly after the period end. Given the market focus on deposits and liquidity risk management, we have provided some additional disclosure in the materials.
Our deposits are well diversified by market, segment, and industry, and we have not seen any impact from the recent issues in the banking sector. As you can see on slide 14, no single market contributes more than 30% of our deposits. We have grown deposits at a stable CAGR of around 5% since 2008 through both market and idiosyncratic stresses. As most of our deposits are in Asia, Africa, and the Middle East, we did not expect nor did we see significant deposit movements in our markets as a result of recent banking sector challenges.
Our global transaction banking franchise provides access to both US dollar liquidity, given the US dollar remains the main currency of global trade and high quality and sticky corporate operating account balances. Operating accounts for nearly half of all CCIB deposits and around 65% of our transaction banking and security services customer balances. In terms of deposit insurance, schemes in our main retail markets are simply less generous relative to those in the West, where we do not have a significant presence in retail, SME or local corporates. Our weighted average deposit insurance in footprint markets is one-fifth of that in the U.S. and half that in the U.K. Turning to slide 15. Our deposit migration and beta outcomes remain in line with our expectations and within our prior guidance.
The increases in deposit betas and CASA to time deposit migration over recent quarters simply reflect the ongoing rate hiking cycle. Whilst we have seen migration from CASA to TDs, we have broadly maintained overall deposit levels in recent quarters. It's worth remembering that time deposits remain good quality liquidity despite being generally more expensive than CASA. Further disclosures on the balance sheet are in the presentation materials. It is also worth noting that most of our assets are of short duration, which provides a high degree of flexibility, if needed, to navigate periods of dislocation or stress. Finally, onto capital and RWA on slide 16. Risk-weighted assets were up $6 billion or 3% in the quarter to $251 billion. Asset growth and mix changes contributed around $4 billion of risk-weighted asset growth, mainly in treasury and FM.
Credit migration of $1.8 billion was mainly due to further sovereign downgrades. There were $1.8 billion of efficiencies delivered in the first quarter, half of which were in CCIB. Market risk-weighted assets were up $1.7 billion, reflecting increased positions in the rates and credit businesses. The CET1 ratio of 13.7% declined 25 basis points in the period as first quarter profits were more than offset by the $1 billion share buyback program announced at our full-year results , other distributions, including the interim dividend accrual and RWA growth. The recent rally in rates in the first quarter also led to a reversal of some prior FVOCI losses in our treasury portfolio as bond prices increased as yields fell. Our $1 billion share buyback is progressing well.
Including this, we have announced total capital returns of $2.8 billion since full year 2021, against our full year 2024 target of more than $5 billion. In summary, and looking ahead on slide 17, the group delivered a strong performance in the first quarter. Our footprint markets are expected to outperform the West in terms of growth and activity levels. Our diverse franchise is underpinned by a robust balance sheet, which is well capitalized, highly liquid, and well-positioned to navigate ongoing challenges in the global economy and the financial sector. Income is now expected to grow at around 10% in 2023, with the slightly lower rate of increase in our NIM being more than offset by the momentum in wealth management, the progressive benefits of China reopening, and increased confidence in the FM business, reflecting the strength of client-driven flow revenues.
We expect 2024 income to grow in the 8%-10% range and the NIM to be around 175 basis points. We expect to deliver 3% positive income to cost jaws in 2023 and 2024. The estimated impact of FX is presently a $200 million headwind to income and a $100 million expense tailwind. Our loan loss rate will continue to normalize towards our historic through the cycle 30-35 basis point range. We will continue to operate dynamically within our 13%-14% CET1 target range. Putting all of this together, we are confident in our ROTE approaching 10% this year, exceeding 11% next year, and with further growth thereafter. With that, I will hand back to the operator for Q&A.
Thank you. At this time, in order to join the queue, I'd like to remind everyone to ask a question, press star then 1 on your telephone keypad. If you wish to ask a question via the webcast, please use the question box available on your webcast page to submit your questions. Your first question comes from the line of Guy Stebbings from BNP Paribas. Your line is open.
Morning. Thanks very much for taking the questions. The first one was just on sort of jaws guidance and on reflection, given the upbeat commentary on revenue and favorable guidance there. Just trying to understand why the jaws guidance is still unchanged, also after what was an okay quarter for costs, you know, certainly slightly better than consensus. Can you just talk through why you're not grading the jaws guidance given the revenue improvement and how we should think about cost evolution this year? Is it just simply too early to rise up that guidance or is there some incremental cost pressure versus when you struck the guidance?
Should we be mindful perhaps that if it's financial markets and wealth revenues which are doing more of the heavy lifting then performance related pay could be higher than say were NI driven? The second question was just on RWAs, which came in a bit higher. You referenced asset growth and mix and asset quality, the driver of the increase. It wasn't, you know, meaningful loan growth and asset quality in general seems to be quite constructive. Perhaps you could just give a bit more detail as to what happened there and how we should think about evolution for RWAs for the rest of the year? Thank you.
Okay. Shall I pick those up? Thanks, Guy. On the jaws, as we have said before, the higher we can go on income growth, the more favorable that is for jaws. You clearly saw that last year where we had a jaws improvement of 6%, off a, you know, very high income print. At the start of this year, we said 8%-10% on income both this year, next year, and around 3% on jaws. We have slightly upped the income guidance, as you know, to the higher end of that, i.e., the 10%. We've moved sort of 1 percentage point, I guess, from the middle of that range. You know, the exact precision of what that will do with jaws, to the nearest sort of 0.1 is sort of difficult to forecast.
What we have said is we do think the 3% should be there, this year. If we can end up with income higher than what we've guided today, then I think that would be definitely positive to the jaws that, you know, we have guided to. Tight control on cost, very focused upon this. I do think if you step back and look, I think slide 11 shows this. The 6% jaws we got last year, the 3% this year could be more depending upon income, 3% next year. The collective of all of that is huge. Huge operational leverage in this business. I mean, it really is very, very significant. Takes cost income ratio down quite dramatically over a 3-year period.
I think bottom line that, you know, 3% is something that we should deliver this year. If we do manage to get income above the range, then hopefully that can be additive to that. On the risk-weighted assets , lots of moving parts in there as ever. I would not read anything at all sort of ominous into what we've got here. We have got some optimization efficiency gains from the first quarter. We have got more to come over the balance of the year. We have seen loans and advances a little bit flat, partly 'cause mortgage growth has been less. That has got a lower risk-weighted asset density , so waiting, and hence that doesn't manifest it so much in the risk-weighted assets .
We are confident that low single digit growth, both on loans and advances and RWAs is where we should end up at the full year, therefore I would just be, you know. This is well under control. We are monitoring it carefully. It's very, very integral to the overall drive to get the ROTI of the business up, so it has huge focus within the business.
Okay, that's clear. Thank you.
Your next question comes from the line of Joseph Dickerson from Jefferies. Your line is open.
Hi, good morning, gentlemen. Just a quick question when thinking through the balance sheet here. The LCR looks to be an all-time high at 161%. LDR looks like, at least so far as I can see, almost record low 56%. Cash up, whatever it is, 28% quarter-on-quarter. I mean, how do you think over time, let's say over the next 18-24 months, how do you see that LCR evolving and kind of how have you thought about that in the NIM guidance? Have you just assumed it's kind of static on where it is today, so the three bits drag just annualizes through? I guess, what would you do, you know, if things stabilize in terms of the backdrop?
Would you be looking to bring that LCR back in, or is this kind of a permanent reset in the LCR? That's the first one. Secondly, just on the HIBOR rate sensitivity. You said at your full year results, I think something like a minus 50 basis points on the in the HKD bucket was something like negative HKD 20 million of income. Basically, kind of broadly neutral. Has the HKD bucket over the course of, let's say in the first quarter, have you become perhaps liability sensitive in HKD terms, or not? I'm just trying to think through how movements in HIBOR now impact your business because it's been historically rather significant, but it seems like you're pretty neutral now.
I'm just wondering where you are in the first quarter on that. Thanks.
Okay. Let me pick those up. Obviously what we are seeking to do here is to get the ROTI of the group up, but in a safe manner. Clearly, over the last quarter, we have seen turbulence within the sector, as I'm sure with most banks, just making sure that we are strong on liquidity metrics is important. As you've seen today, we printed very strong liquidity metrics, very good deposit metrics, et cetera. I think first point is we do feel that we have navigated through that period well. Secondly, as is implied in the NIM guidance or explained in the NIM guidance, we have taken a view that we may run with slightly higher liquidity for a period of time. That is not hugely ROTI dilutive.
It is actually something which just provides us a bit more of a cushion as we go through the next period of time. If there are any other uncertainties, unpredictabilities out there, at least we will sit there, well covered from a liquidity point of view. I think taking a view into 2024, you know, is more tricky. We're obviously guessing further periods of time. At the moment we've sort of said probably let's think that we run a bit more liquidity over the next 15, 18 months. If the market enables us to relax that a little bit, then maybe there is a little bit of sort of ROTI enhancement come from that. I think as a basis for planning the business for us, it feels like the right balance between being safe, being liquid, and getting the returns up.
On HIBOR, the answer actually is pretty similar to last time because we are pretty well matched on both asset and liability side. We don't have a huge sensitivity to rate changes there. I mean, if they're extreme, obviously that could be more the case. In the round, it is still relatively balanced and rate insensitive on HIBOR .
Let me just come in on the liquidity point. Of course, everything Andy said is absolutely correct. We haven't had to force anything in the first quarter. You know, we allowed our LCR to move up from the year-end period on the back of sort of natural business flows. That will. I think will continue to be the case. Obviously, we can redeploy that liquidity assertively, and we chose not to, given the backdrop. It's just I think it's an important distinction to make between having to take overt actions to bolster our liquidity position, which is not the case, versus allowing natural business flows to give us the opportunity to strengthen liquidity.
Of course, there's a relatively small cost to that. It didn't impact the quarter overall. We don't think it will impact the year overall. There's some opportunity costs, and that's one that we're very happy to bear during a time when the ultimate outcome, both in terms of market assessment, but also in terms of regulator assessment, around liquidity requirements, is still a bit fluid. We're sitting here very comfortable with very strong underlying income momentum, with a strong liquidity position, no particular pressures, but as we said right up front, not complacent at all about what could evolve from here.
Thanks.
Your next question comes from the line of Robert Noble from Deutsche Bank. Your line is open. Your next question comes from the line of Alastair Ryan from Bank of America. Your line is open.
Yeah, thank you. 2 questions, please. One on loan growth. Absolutely fair in the core to the dynamics of Hong Kong mortgage pricing are, been a bit weird, but structurally that's your biggest market. It's your biggest single book. How do you find ways of getting back to growth specifically in Hong Kong, but also more broadly? I mean, it's the growth business in the end. Secondly, just to press on the LCR and the NIM. I mean, I didn't come across anyone who felt there was a liquidity or funding or deposit issue at Standard Chartered. Why would you run with more?
I mean, I think to Joseph's comments, I mean, you're quite an outlier on having had an awful lot of liquidity and a very low loan to deposit before. Given the margin, you know, it's quite a sensitive topic for the shareholders. Sort of no margin expansion from here over the next two years is not ideal. I appreciate that, other income's growing strongly. Just to press on, you know, why so much liquidity? Thank you.
Yeah. Let's, let's, as Andy said, as we've said for quite a while now, pick up the Hong Kong question first. We're focusing on returns and we've been able to generate very strong growth despite the focus on returns, right? Let's be clear. We had 13% growth in income in the first quarter, and we're forecasting 8%-10% growth over the next couple of years, with 10% this year. I don't think we're lacking in either growth ambition or actual growth delivered. When we get to the situation in Hong Kong as we were in, for parts of last year and early this year, where margins just compressed significantly because of the dynamics really in the Hong Kong money markets.
You, you've all seen the quite extraordinary movements in HIBOR versus LIBOR. Obviously the currency's been under a little bit of pressure, dealt with perfectly adequately by the HKMA monetary program. At a time when putting on additional mortgage assets is not accretive to returns, we don't feel compelled to do that. We've got a strong market share. We've got a very strong position in Hong Kong. Our client profile is very strong and getting stronger from what we can see. We don't feel the need to participate in a returns anti-accretive or dilutive way in the Hong Kong mortgage market.
That said, if that were to go on forever, we'd look at the importance of having mortgages as an anchor product, as we always do, and we'd accommodate. We didn't stop writing mortgages in the first quarter. I think the Hong Kong housing market is also improving markedly. Obviously, after a very difficult time, for a couple of years, the demand for mortgages is coming back. We've maintained our share and will continue to maintain our share in that market, and we'll be able to do so profitably and accretively, just not in the first quarter. I wouldn't read too much into that. In terms of other areas for growth, we're seeing good early stage growth in the rest of our consumer credit portfolio.
The various partnerships that you've heard us talk about over the past few years are kicking in. The Nexus program in Indonesia has active, although not actively marketed as yet, but active for the liability side of the balance sheet. For the asset side, we expect to get final regulatory approval very shortly. But our other consumer credit partnerships across ASEAN, including Singapore, Vietnam, Malaysia, Indonesia, are active and performing well. The asset side of our digital bank, Mox in Trust, is kicking in well with good balance sheet growth, and that will support our growth in other assets over the coming over the coming quarters. Maybe I can pick up on the are we running too much liquidity?
That's a very subjective question. I can tell you with the benefit of hindsight, when we look back on this year from now, we may say, yeah, we could have deployed a little bit more of that liquidity a little bit sooner.
You know, Alastair, when you've got, frankly, so many things going well for us right now, and the underlying business is really performing at or better than we would have hoped in virtually every single regard, to screw that up by being distracted by some sort of liquidity blip would be a really dumb thing for management to do. We could be accused possibly with the benefit of hindsight of being a bit on the cautious side. If we can be a bit on the cautious side, producing an 11.9% return on tangible equity and then, you know, growing above 11% next year, et cetera, et cetera, I'll feel pretty good about that outcome.
Thank you.
After our next phone question, we will move to webcast questions for a short period of time, and we will return back to phone questions. Please stay in the queue, and we will get to your question shortly. Your next phone question comes from the line of Perlie Mong from KBW. Your line is open.
Hi. Can I just ask two questions? First one is on NIM. You've moved NIM guidance down based on high liquidity, which I guess we've touched on, and updated forecast. Can I just get more color on what the updated forecasts relate to? Presumably, they may be around US rates because obviously the market is assuming something like maybe 1% over that 1 and down over the month. Are your targets incorporating that? Because it doesn't sound like you've changed deposit migration or beta assumptions. I guess, secondly is on impairment. It's very low this quarter, so obviously noted that there are some sovereign releases, but even accounting for that, the underlying is pretty low.
you know, what's driving the charge so low and why, as a result of that, you're not changing, the guidance that you've given previously?
Okay. Let me take both of those. The NIM we have shaved from 175 to 170 current year, I guess one should see that against the backdrop of 140 last year. Still significantly up, but just slightly lower. As you say, really 2 reasons for that. One, liquidity, which you've talked about, and the other is just refining the outlook. I mean, every quarter we will refine the outlook, and there are minor changes in growth rates in individual markets, product mix changes, things like that. The betas, as you say, are behaving very much as we had expected them to do. That is not a feature in there. Yeah, at the end of the day, we're talking about very, very small numbers of basis points.
When you put that together with liquidity, we feel 170 is the area that we will be likely hunting in. On the impairment, it is definitely an encouraging start to the year, that is a very low charge, so evidently, relative to the size of our book and compared with our history as well. I think the two areas where we took charges last year, the China Commercial Real Estate and the sovereigns, we have reassessed both of those, and we actually think where we were marked at the end of last year, give or take, is appropriate still at the end of March. Not seeing by inference a deterioration in that space. The rest of the book is behaving well, but not by chance.
I think that's a consequence of a lot of things we've done over several years to really get the book in a better space. It is difficult to forward forecast credit impairment, and therefore we're just being, you know, a little bit cautious. We're not updating the guidance at this point in time. We will see how the second quarter goes. If we have another second quarter that's as low as the first quarter, then I suspect we will be changing the words on the guidance. Let's not get ahead of ourselves with that. It's just a good start to the year and, let's keep our fingers crossed that that continues over the remaining quarters of this year.
Thank you.
I'd like to now hand over to Greg to begin our webcast questions.
Thank you. First question from the line of Robin Down at HSBC. It's a three-part question. First, can you perhaps talk a little bit about how you assess the trading book funding cost? There's quite a substantial uplift for the 2023 estimate, while I understand it should be revenue neutral, it does mean a growing gap between adjusted NIM and reported. What's changed? Second part of the question, is there any update on the sale of the aircraft leasing franchise? Is that likely to complete this year? The final part of the question, I'm interested in the, excuse me. I'm interested in the growth in new account openings in wealth management, without absolute numbers, it's difficult to know how important that is.
Are you flagging it because it's a signal of confidence in the wealth management backdrop, or will those account openings have a meaningful impact on half 2 revenues?
Okay. Let me pick up the first of those, the trading book funding costs. First of all, context. Trading book is sitting in the Financial Markets business. Financial Markets business, as you know, has been growing very steadily for us over a period of time. It is a high returning business. It is a sort of 17% or thereabout ROIC business. What we have seen during the course of the last several months is continuing high demand for the products from there. The funding cost adjustment is a sort of a tricky bit of accounting, if you like. We had guided to $1 billion of adjustment in February, and we're now saying it's $1.7 billion. How would I look at that?
The best way I think to look at this is how we fund the trading book. We have got different types of funding available to us. Some of those are drawings from our banking book, from the banking book managed by our treasury team. Some of it is repos, structured notes, et cetera, within our financial markets business. The mix of how we fund it between those two depends a bit upon client demand. It depends a little bit on market dynamics. What we are saying is that we see a slightly stronger mix towards treasury and drawing from our banking book and a slightly lower mix coming from the other areas as we now look at the year going forward. That we will, you know, monitor.
At the end of the day, it is all about whether the returns overall are justified, and if we are not making the returns on those, then we won't be borrowing that money from the banking side. If we are making those returns, we will be making that money. Consequently, this latest estimate is an updated view, and it is what is in support of what we do see as being good growth in our financial markets business. Remember, financial markets business in the first quarter down 5%, but there was a one-off last year. If you normalize for that, it's 1% up, and that is against a record quarter in financial markets a year ago. At the end of the day, it is a change in that number, but it is a mixed change.
It is nothing more than that, and it is in support of a business that is growing very, very strongly. On aircraft leasing, your second question, we are mid-process in looking at the options for that, and I would certainly hope by the end of this year that we will have concluded that process, if not a bit earlier than that, can't comment any more on it at this point in time. On new accounts, we have seen, as I said in my script, quite a significant increase in new account openings. I understand that it's sort of quite difficult to get one's mind around what the financial impact of it is because it is the accumulation of many accounts and the accumulation of the deposits and the assets associated with those accounts .
The half year, I think we'll give more of an update when we've got a fullest of the disclosure as to what is going on in there. A four-fold increase in Hong Kong, doubling in China is certainly very encouraging as we look to the balance of the year.
Okay. Thanks, Andy. The next question comes from Jason Napier at UBS. It's a two-part question. First part: With rates down everywhere since the full year result, what accounts for the increased cost of funding the trading book from $1 billion to $1.7 billion? Second part of the question, timing for release of sovereign and China CRE overlays? Appreciate retained guidance for FY 2023 loan losses, but wondered at why are you retaining those overlays given the environment and stage of the year?
I think maybe I've answered in part the first question. I would look at the change from the 1 to 1.7 about the mix change slightly more that's being borrowed from the banking book and less from structured notes and repos, et cetera. It is much more about mix than anything else. Timing release of Sovereign China CRE overlays, we do an assessment in detail regularly, we go through looking at each of the exposures and deciding what we need to do with them. The result at the end of March is an update of that review. We are still carrying about 170 of overlay for China Commercial Real Estate in total.
We have provisioned of our $3 billion total exposures to China Commercial Real Estate, just under a third of that in aggregate over the last couple of years. We still think, having done a detailed review account by account, that that is the appropriate space to be. It'll obviously be interesting to see over the coming months whether sort of demand in the sector starts to pick up in response to all the policy actions that have been taken. At this point in time, it is an account by account bottom-up review, and we are comfortable we have marked it to the right place.
Thanks, Andy. Next question comes from Manus Costello at Autonomous. Two-part question. first part, your slides note that you are the sixth largest global U.S. dollar clearer. Do you think this strong market position in dollar clearing makes M&A activity more challenging for Standard Chartered? The second part to the question, should we interpret Bill's comments on the LCR as meaning that some of the mix shift you implemented in 1 Q is a front-loading of expected regulatory changes to the LCR?
Let me take a sec, Steph. Thanks, Manus, for the questions. I think our position as a very strong U.S. dollar clearer, and obviously at an important component of being a global network bank, would not be seen as an asset by pretty much anybody that would be interested in doing anything with Standard Chartered, starting with clients. I obviously couldn't speculate on what would motivate a different buyer or a merger partner, whatever, in an M&A transaction.
I guess implicit in your question is, does the fact that the US dollar is, has been, I think the term that some people have been using is weaponized, in the context of geopolitical tensions, would that impede some buyers from being interested in working with Standard Chartered that might otherwise be interested? I guess the question I'd have to ask is, what would motivate those buyers in the first place? What other obstacles might there be if the fundamental concern is around geopolitical tensions and role of host countries in the world? I don't know what the answer to that question is.
I suspect that there are some people that would not be interested in doing anything with Standard Chartered Bank for geopolitical reasons. There are other people that would be very interested in doing things with Standard Chartered Bank despite geopolitical tensions. Thankfully, none of that matters because all we're doing is focusing on running our business in the best way that we possibly can. I'll give ourselves, you know, reasonably high marks for progress that we've made so far. It is not a big preoccupation for us, one way or the other, but it's a fair question. On the regulatory changes, I mean, who knows?
In my upfront comments, I referred to, well, I made a bit of an exhortation to regulators to take 2 steps on the back of the turmoil that we've seen. This is very early stage in this debate. It's gonna take years, I think, for this to fully play out. One is to harmonize regulation between banks. The most obvious example of that is within the United States, where different banks are treated differently and obviously had very different outcomes in terms of in particular liquidity regulatory requirements. I assume that those will be harmonized very quickly. Every indication is that they are. The, I mean, one way or another.
But second to take for the Basel Committee and others to take a hard look at regulation, between markets where there's been divergence, between regulators in different markets. That creates gaps, and it creates gaps in understanding even apart from gaps in reality. And I would encourage regulators to redouble their efforts to the Basel Committee to have a consistent regulatory platform. It becomes quite important for us, given the breadth of the markets in which we operate and the different regulatory standards that we experience. The second though is to ask the question, well, you know, what's the right answer here? Should banks be increasing their LCRs or Net Stable Funding Ratio, or as an alternative?
I think in some cases that will be the regulatory reaction. You know, thankfully, we've got huge buffers above what any kind of a regulatory minimum would be today, as Alastair helpfully pointed out earlier. I think the interesting alternative though is, you know, can central banks take a different approach in terms of the way that they provide liquidity to the market? Unfortunately, the provision of central bank liquidity was highly uncertain as we went into the crises in the U.S. banks and with Credit Suisse. Some of the actions that central banks took were initially leading up to the crisis point, somewhat vague.
Then they had to come in with the big gun afterwards, offering, you know, very, very large concessionary funding programs to U.S. banks. Then obviously orchestrating the sale of Credit Suisse along with the wipe out of AT1s into UBS. Those aren't good outcomes, right? Those are bad regulatory outcomes. I have to think that the likelihood of a bad regulatory outcome would have been reduced had there been clarity around the liquidity that central banks would provide against eligible collateral ahead of the crisis in a relatively non-stigmatized way. This is an enormous concern about moral hazard.
I'm, and I'm pretty sure as we reflect back on this last couple of months, that the concern about moral hazard is higher, not lower, because of the lack of preparedness by regulators around the world to deal with a competence crisis. Editorial opinions. Your question is, are we running excess liquidity because we think regulators are gonna force us to? Not really. Not really, and certainly not in the short term, because we've got these big buffers.
We figure as we add up the pluses and minuses of being ahead of the curve on any changes that could come and being ahead of the curve in terms of what the market might expect and allowing us to be undistracted by our core mission, which is to grow our top line and improve our return on tangible equity to 11% and then beyond. We don't need the incremental distraction of ever finding ourselves behind the curve in terms of liquidity. Sorry for the long answer to the two good questions.
Okay, thanks, Bill. We'll go back to the telephone lines now. Operator?
Great. Thanks, Greg. Just as a reminder, before we move on to our next phone question, if you would like to ask a question, please press star one on your telephone keypad. Your next question comes from the line of Aman Rakkar from Barclays. Your line is open.
Good morning, Bill. Good morning, Andy. Thanks very much for the new disclosure. Actually, it's really interesting, and the insights around your approach to liquidity. I had one question around deposit mix in some of your key markets. Again, slide 15, thank you very much for that. I know that you're basically trending in line with the guidance. I guess an observation that you might make is the liquidity dynamic in Hong Kong and the fact that HIBOR is, you know, subdued and has kind of been lower than what we'd expected year to date. You know, there might be a scenario where there's a bit of a catch up and HIBOR gaps higher at some point. If that was the case, is that a risk to any of these TD deposit migrations?
You know, anything you can kind of give us on how that's trending through April? You know, do you feel comfortable about that, or is there, should we be thinking about any kind of NII or NIM sensitivity to some kind of potential outcome that's not beyond the realms of reason? Thank you very much.
Yeah. Good question. I mean, obviously Hong Kong is a big market for us, but it is not the only market for us. The first thing is that, you know, when we give the stats out, we've done the CPDB stats on that slide on the core main markets. We have got a lot of other markets there as well. Overall, we go back to businesses, we collate this, we get their forward views, we are very comfortable with the guidance range that we have given. There may be some ups, there may be some downs, but I think overall, the sort of range we indicated a while ago is what we have been operating in. I don't think at this point in time there's any reason to have a concern that that wouldn't continue to be the case.
You know, fair point, but not a big concern. We'll keep monitoring it. And, you know, we'll sort of see where we get to. I mean, the other point obviously is for time deposits, they are not bad liquidity. They just cost a bit more. But, in a liquidity sense, you know, that is also a good source of deposits. Simple answer, I think things should operate within that range as far as we can see it at the moment, notwithstanding your comments on HIBOR.
Thanks very much for that. Could I just ask one follow-up? I guess the excess liquidity position that you're operating with, that we've probed throughout the conf call, it does also reflect an excess liquidity position of your customers that I guess has built over a very long period of time. Maybe some of your target markets have been less affected by things like COVID and the various support schemes as per the West. You know, you can see it through every operating metric that you report, your LDR, your LCR. You have basically a lot of deposits, and your customers have a lot of excess cash. I mean, we're obviously entering into a period of QT and unwinding and what have you, rates being higher.
I mean, do you have a sense of what happens to this in the long run view? Like what happens to your customers' long run excess liquidity position, and what does that mean for kind of your business going forward? Maybe that's a bit too of a long-term question, but any thoughts you've got there, pretty helpful.
I'm sure we could all muse on this question quite a bit. I think in the short to medium term, the bigger impact on liquidity positions is certainly in a market like Hong Kong, is much more mundane things like how much are people gearing up to invest into the China opportunity or into what is expected to be strong growth in the or re-emergence of growth in the IPO market. You know, Hong Kong is awash in liquidity right now. That's clear. Obviously you see that through the level of HIBOR, but also in bank balances. But it's not to do with quantitative easing at all.
It is everything to do with the fact that the people are gearing up to invest but haven't yet invested, and the money in the meantime is sitting in bank accounts. I think that those are the things that are driving liquidity in the short term. The QT, you know, versus QE question is just a lot less relevant in our markets, even for those currencies that are a little bit more or very closely linked to the dollar. In the long term, I think it's gonna be fascinating to see how a structurally higher rate environment together with removal of surplus liquidity, is gonna play through in the banking system.
Like obviously we've seen some challenges over the past couple of quarters as individual companies have reacted in unpredictable ways or they had unpredictable effects on their earnings mix or on their balance sheet. The most obvious one being Silicon Valley Bank, but not limited to that. You know, are there more unforeseen or at least not yet fully flagged challenges in the banking system somewhere out there that will become clear as liquidity is normalized? Yeah, probably. Are they sitting in Standard Chartered Bank? We really don't think so.
I can tell you we're very, very vigilant about it and the questions that you've quite appropriately asked about why we're running the liquidity that we are are in part because that things are happening that neither we nor anybody else in the market has forecast very accurately. We just wanna make sure that we can continue with our core strategy through whatever bits of turmoil the market throws at us. I will say so far so good.
Thank you.
Your next question is from the line of Andrew Coombs from Citi. Your line is open.
Good morning. If I could answer... or ask even, a couple of questions on wealth, your slide 10 disclosure, and then also a follow-up on impairment. On the wealth slide that you kindly provide, you state that wealth management revenues are flat on a constant currency basis year-on-year, and that's even with Hong Kong up 3% and China up 11%. Perhaps you could just elaborate on where you've seen the decline in other regions. The second question would be on that Hong Kong and China development, can you give us any idea how that progressed over the pace of the quarter? I imagine it accelerated as you went into March.
When we're thinking about the Q2 run rate, the additional bank assurance income, treasury products income, could it potentially be even higher than you're looking on slide 10? My question on impairments, obviously a very good result today. Can you give us an idea of how much the improvement is Stage 1 and 2 versus 3? The reason I ask that is because you've put through some quite sizable changes to your IFRS 9 assumptions on both Hong Kong and Singapore GDP. Thank you.
Okay. wealth management, if I sort of just step up to a higher level, our full year wealth management income 2021 was about $2.2 billion, and then last year, dropped to about $1.8 billion. You know, we all know the reasons for that. The market was more subdued last year. I think the $500 million print we've got for the first quarter this year, is sort of, you know, encouraging. Times that by 4, it's $2 billion, and we are sort of not back at 2021 levels, but, you know, we're certainly back above 2022 levels. We will see how individual markets move, over the next few quarters. I think we're definitely there with a better momentum.
Clearly Hong Kong picking up and China picking up and, you know, we'll see what happens. Hopefully we won't see so much of a dip in the second, third, fourth quarter as we saw and as you can see from slide 10, last year. On the Stage 1, Stage 2 impairments, majority of cost is on Stage 3.
Bearing in mind that is a majority of a very small total.
Thank you.
I think we can safely say that the IFRS 9 economic outlook changes are immaterial in terms of.
Yeah.
Stage 1 and 2.
Your next question comes from the line of Robert Noble from Deutsche Bank. Your line is open.
Morning, all. Thanks for taking my questions. Apologies, my phone cut off earlier. I just wanted to dig into liquidity detail again. I think your HQLA is actually flat on the quarter, your LCR is up 20 percentage points. You also mentioned the treasury book. A larger treasury book explains the 3 basis points in NIM. I just wonder if you could square all of that off for us. Why is the treasury book larger, HQLA down? If HQLA is down, what changes happened on the, you know, cash outflows liability side to increase the LCR by so much? Kind of leading to the point of why does it negatively impact the NIM?
Okay. I mean, you've got a lot of moving parts in here as you refer to in your question. Some of the LCR calc is one of the outflows, some of it is what we are actually holding. Not all of what treasury holds is in HQLA. We have got quite a large amount that sits outside of HQLA, which comes into the LCR calculation and is managed by the treasury team. Generally speaking, to sort of lift yourself from the detail of the numbers, we have in total liquidity, not just HQLA terms, but have retained slightly more liquidity over the period of time. The cash outflows, obviously, we look at regularly. When you put that all together, you get to the LCR that's at the 161 level, not at the lower level.
You also can have surpluses that are in some countries that, you know, don't come into the calculation. It is complex. I mean, underneath the surface it is complex. The net impact on NIM is there is a little bit less that is being held that is generating income, and therefore, it does have an impact on the NIM. It is generally not particularly capital intensive, so the impact on ROT is negligible, but that's why you get the effect of slightly depressing the NIM, ending up with the LCR slightly higher. The HQLA, as you say, sort of, not having moved so much. Total liquidity is a bit greater than the HQLA element of it on its own.
Thanks. I think, Bill, I think you mentioned earlier in your comments that it wasn't forced higher. It was natural business flows, but 20 percentage points seems like a massive movement to be natural. Is the, is the liability, is it purely current accounts into time deposits? You know, reducing the cash outflows, or have you actively raised, I don't know, unsecured liquidity? How is it actually, what's actually pushed it 20 points higher?
No, maybe I should be a little bit more clear about what I mean by not forced. We're not turning clients away. We're not fundamentally changing the pricing of our liability. Hence the deposit beta, the guidance being consistent with what we've said before. That's what we really mean by not forced. We've had a good steady flow of deposits. As Andy mentioned, there were some ins and outs, including the very normal sort of over month and in and out of the corporate deposit flows. We've done that consistent with the pricing outlook that we gave that was along the lines of our deposit beta guidance.
We've allowed, business inflows and asset flows to, not be, as we call it, aggressively redeployed into higher yielding assets, in the interest of maintaining a strong LCR. It's not cost us anything, but of course there is on the margin or opportunity cost to running with higher levels of liquidity.
Okay, great. Thank you very much.
Your next question comes from the line of Tom Rayner from Numis. Your line is open.
Yes, sir. Thank you. Good morning, everyone. Can I have two, please? Just, firstly, to go back to, I think Perlie's question on the impairment guidance, sort of heading towards the normalized 30-35. I mean, the only two areas I think you've really flagged in recent periods as being of concern has been China CRE and the sovereign issues. Looking at the presentation today, it looks like you're fairly confident that things are stabilizing now in China CRE , and we have seen write backs against some of the sovereigns. I think excluding all write backs, the underlying charge in Q1 was 12 basis points. It's quite a big move from that sort of 12 run rate back up to sort of 30-35.
Just wonder if there's any specific areas which are performing well now which you are concerned might deteriorate, maybe CRE in other economies, more developed economies perhaps. I just wonder if there's anything that you could point to more specifically to sort of, help explain that move. I have a second one, please, just on guidance.
Yeah. I'll take a high level swipe at that one, Tom. I mean, there's nothing that we're particularly concerned about. Obviously, we've, we continue to watch the sovereign situation, and we're not, we're not immune to further degradation in the credit worthiness in some of the emerging market sovereigns that are distressed. We manage those exposures pretty actively, and have been able to absorb the restructurings that have come through so far quite well.
Obviously the write back, just to be clear, what causes a write back at a time when stress levels seem to be continue to be high? Well, as restructuring details settle out and we see what the securities or loans that we own at the end of the day are actually worth, compare that to where we provided expecting as best we could some kind of outcome on a restructuring process, we have a small write back. That's. It's not that the underlying situation has improved, it's that the clarity has allowed us to reassess the level of prudence that we applied in the first place on the restructurings. Obviously, we'll get some of those right or we'll get some of those a little bit wrong, but not by a lot either way.
We continue to focus on sovereigns. Commercial real estate globally is one to focus on. We're not overweight. I know we're probably underweight relative to the banking sector. Doesn't mean that we're not very focused on what we got, and we are, but we don't see any acute signs of stress in our portfolio as yet. Obviously watching very carefully for all those recession sensitive industries where we have exposure, including the whole commodity sector. No signs of stress at all, as you'd imagine at current price levels. If we have the much touted decrease in GDP, global GDP growth in particular in the West, we'll keep a careful eye on that. No.
The short answer is, you know, how do we get from where we are to 30 to 35 basis points through the cycle? We hope we don't get there. We're very focused on taking steps to avoid getting there. Given the business that we're in, it would be imprudent to assume that somehow this time is gonna be different as we look to the next 7 years of an economic cycle.
Okay. Thank you. Just on the second one, probably for Andy. I mean, it's just on the guidance, the sort of revenue guidance of 10% on the constant currency basis. I mean, it says that I think you're expecting $200 million of adverse FX impacts this year. Am I right in my math to say that that would be revenue of about $17.1 billion versus the $17.3 billion, which is your current consensus? Then doing the same adjustment on the cost for FX and taking the 3% jaws drops you out at somewhere around $11 billion. Which again I think pre-provision level is maybe $100 million light of where consensus is. Is that the right sort of ballpark? Am I thinking about that correctly? Thank you.
Tom, I think trying to forecast to within 100, particularly when it's FX, is quite tricky. I mean, generally speaking, we're reasonably happy with sort of where consensus is at the moment, albeit we don't have the full inner workings of what exactly the FX rates that are sitting behind, you know, each of the models that other people have done. I'd say sort of, you know, within a range, we are, we're comfortable with where consensus is at this point in time.
Yeah. Okay. Lovely. Thanks a lot.
Your final question for today's session comes from the line of Gurpreet Sahi from Goldman Sachs. Your line is open.
Thanks for taking my question. Good morning, Bill and Andy. My question is on slide 10. Can I ask, with respect to this increased activity levels around the Hong Kong, China region on wealth management, where are we relative to normal levels? Normal levels can be like 2018 or 2019. I know, Andy, you did give us some numbers on 2021, but I'm really focused pre-COVID and what we are seeing. If we see, I mean, in the second half of this year, more mainland Chinese come and sort of ramp up the activity on the wealth side, especially in Hong Kong, then how much is the upside risk to the guidance on revenue? Thank you.
I mean, we're sort of building back to pre-COVID levels. You know, things like air travel and so on in and out of China obviously still recovering from those levels. I think, you know, I gave you numbers for the previous years. I think wealth management back in 2019 was, what, $1.7 billion. You know, we're run rate now half of a billion in a quarter is $2 billion, it's up ahead of that. I'd say, you know, we're getting back around COVID levels. It's obviously been depressed for a period of time. The account openings is encouraging. A half billion print in a quarter is encouraging. You know, we'll see how we go for the balance of this year.
Definitely a higher level than last year. Maybe not quite at the peak level the year before that.
Just, there's some of the leading indicators are still lagging quite a bit. The one obvious one is just mainland visitors to Hong Kong. Of course, that's not the only reason that they go to Hong Kong, which is to open up their wealth management accounts. That's. There's correlation. That travel pattern is not fully restored. We think it will. The second thing that's, that was set back quite a bit during the pandemic days was the kind of the relevance of the Greater Bay Area Wealth Connect program. You know, we're up and running. We're opening up accounts. The partnerships between our bank in Guangdong Province and in Hong Kong, but also partnerships with other banks are gathering speed.
That effort was very slow during the lockdown period. That's picking up again and will pick up much further as the travel patterns change. I'd say that the leading indicators are very good to initially obviously close the gap to the whole pre-pandemic period, but then also generate ongoing growth. We see this as one of our big, big ongoing opportunities and one that for which we're very well positioned. I think we're gonna wrap it up here. I'd say, thank you all for the time and the interest this morning. I will mention our investor meeting.
I mean, you've all been invited to Hong Kong and to Singapore, where we and HSBC will be jointly offering some insights into our businesses, but also the broader economy and markets in Hong Kong, China, and Singapore towards the end of May. I hope to see as many of you there as can possibly make it. I think we've got a good turnout so far. It should be a very interesting program and you can all poke a lot of fun at me and Andy and our counterparts from HSBC at how we're locking arms and marching forward under this long march into the future in Asia. Thanks again, and speak shortly.
This now concludes today's conference call. You may now disconnect.